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The Inflation Peak Is In The Rear-View Mirror

By Steve SavilleMarket OverviewJan 18, 2022 12:53AM ET
www.investing.com/analysis/the-inflation-peak-is-in-the-rearview-mirror-200615040
The Inflation Peak Is In The Rear-View Mirror
By Steve Saville   |  Jan 18, 2022 12:53AM ET
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It was reported on Wednesday 12th January that the year-over-year growth rate of the US CPI hit a new post-1982 high of 7% in December 2021. However, garnering less attention was the fact that the month-over-month CPI growth rate peaked in June 2021, made a slightly lower high in October 2021 and in December 2021 was not far from its low of the past 12 months.

The first of the following charts shows the month-over-month change in the US CPI. Of greater importance for financial market participants, the second of the following charts shows that inflation expectations (the rate of CPI growth factored into the Treasury Inflation Protected Securities market) is well down from its November 2021 peak and actually fell on Wednesday 12th January in the wake of the horrific headline CPI news.

CPI for Urban Consumers
CPI for Urban Consumers

10-Year Breakeven Inflation Rate
10-Year Breakeven Inflation Rate

We were very bullish on “inflation” back in April of 2020 when deflation fear was rampant; not because we were being contrary for the sake of being contrary but because central bank and government actions pretty much guaranteed that the CPI would be much higher within 12 months. Now, with inflation fear rampant, we expect to see increasingly obvious signs over the quarters ahead that the inflation threat has abated, not because we are being contrary for the sake of being contrary but because the monetary and fiscal situations stopped being pro-inflation many months ago.

It’s likely that the next round of accelerating inflation will emerge during 2023-2024.

The Inflation Peak Is In The Rear-View Mirror
 

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The Inflation Peak Is In The Rear-View Mirror

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Comments (3)
as beri
as beri Jan 18, 2022 1:48AM ET
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this article US CPI and not on the Core CPI. The example with December where CPI growth slowed is somewhat normal as the average oil price was lower compared to November, but wait to see the CPI values for January  with higher oil. If you really want to compare CPI trend should use the Core CPI and not the CPI which is moved by the volatile energy and food prices. Opinion not advice!
Shep De
Shep De Jan 18, 2022 1:36AM ET
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nope, 2.25 trillion profits companies markets, 2.5 trillion household wealth, and markets trading higher lower higher just add fuel to fire as traders AND investors skim off the top again and again in this FED free money market. oh, the FED, they've inserted trillions into market . And not let up yet, should've quit QE back summer really. really
Adam Paine
Adam Paine Jan 18, 2022 1:27AM ET
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I disagree. Stagnation is here not because I'm being contrary for the sake of being contrary but because inflation is hard to control due to ongoing supply chain issues and pandemic. This will persist IMO.
 
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